“This is the first time since the financial crisis that we’ve had such a dramatic difference between parts of the big banks,” said Alan Johnson, founder of New York-based pay consultancy Johnson & Associates, referring to the gulf in the performance of the banks’ retail business and their advisory and trading divisions…
Johnson said issues around pay would be less contentious at Morgan Stanley and Goldman Sachs because they did not have the same exposure to coronavirus-related loan losses as the big lending banks. Morgan Stanley and Goldman have collectively taken just $3.5 billion in loan loss charges this year…
“It’s smart to message that [lower bonuses] now. . . . If your income is up 50%, probably bonuses will be up 25%,” Johnson said, adding that bonuses would probably be significantly higher in fixed income, up by less in equities, and down in mergers and acquisitions, where fees are running below last year’s after deals dried up in the early months of the pandemic…
Johnson at Johnson Associates said that while the “very best” who were unhappy with their packages could “absolutely” move to another bank or hedge fund, the “good and the average” would have few options in the current environment.
Financial Times / October 18, 2020